A grocer's ingredients for the recipe of successful modern retail

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04 September 2015

Damodar Mall is the CEO of Reliance Value Retail. Since his first venture, which was built into the super-successful hypermarket chain D-Mart, Mall has been at the helm for two major players in the modern retail industry, Big Bazaar and now, Reliance Value Retail. His adventure with organised retail is going strong even after 15 years. Following the success of his book was The Big Retail Debate held at Crossword Book Store, at Mumbai on 18 June 2015.

During the event Mall was in an incisive debate with Karan Mehrotra, founder, Local Banya, which was moderated by B S Nagesh, vice chairman, Shopper's Stop and pioneer retailer anchors. When he's not busy being a grocer, Mall loves to play the keyboard, a passion that he acquired from his two musician sons.

In this interview with Swetha Amit, he talks about how he became an author by default after being born as a grocer, the changing trends of modern retail and its sustainability in the long run.

Supermarketwala is a book, which provides some insights on modern retail and consumerism in India. What was the inspiration behind this book?Firstly, I don't consider myself as an author. I am just a grocer who runs stores. One fine day I was approached by Forbes India to write blogs for them. They created a blog called Shopkeeper-in-law and I started posting on that.

So that's how I began my tryst with writing. I soon started getting feedback from readers which culminated into a rich interaction and that induced my interest further.

This blog was seen by one of the business editors of Penguin Random house (the publisher of my book) who felt that the content in these blogs would make a fine book.

She [the editor] asked me to consider writing one and eventually got me to sign a contract without any deadline. That got me started for some reason despite the fact that there was no moral commitment. So that's how Supermarketwala came about. Now if you look at my chapters, they are all written from the consumer's point of view. End of the day, I wanted people to relate to what I was writing and I am happy that my objective has been met.

Being from the retail industry yourself, how did you maintain objectivity while penning down this book?That was quite simple. You see I wrote the book from the customer's point of view. While I may be a retailer, my customer is not. So when I train myself to draw a conclusion from the business as a customer, then objectivity comes automatically. As a supermarketwala, I'm not just about a particular retail format. I am about the whole modernisation of retail space, which is the theatre of commerce.

You have talked about the inclusivity factor of modern retail and how malls should overcome the class barrier? How do you think this can be accomplished?There are very few open spaces which welcome everyone without posing any barriers or restrictions. I would count malls in this category. While parks are also a good example, they often end up being dirty. On the other hand malls are not only cleaner but also safer due to the tight security deployed. Initially when the security checks started happening, we were worried whether people would feel offended on being checked from head to toe. But on the contrary, women welcomed this initiative by saying that they felt safer.

Malls today are also inclusive of people irrespective of their age, caste, creed, and gender or socio economic status. For instance you will find a group of four - five college kids who are hanging out together and sharing two dishes amongst them. Now, they are in no position to be able to afford to shop in a mall yet you still find them consuming like any other person.

These malls are also senior-citizen friendly as you find a lot of old people strolling in the malls and they end up purchasing a few things for their families. While we still have a long way to go, malls are gradually equipping themselves to make provision for the differently abled as well. Taking all these aspects into consideration, I would label malls as temples of democracy.

You have mentioned about the difference between shopping in small stores and big malls where the latter tends to lose connectivity with the customers in terms of their needs and preferences. So how do you think this can be addressed?Counter service stores and self-service stores are socially different. For instance if I want to purchase what I did last month, the family store becomes easier to shop from as the shopkeeper exactly knows what I want. He is used to my tastes and preferences so this counter service store ends up being an efficient channel.

However there exists another side to it.

If you look at it from a young woman's point of view, especially when they are becoming more educated and independent, it is completely disempowering for them. Between her and the product that she wants to buy, there is a physical barrier of the store counter she cannot cross, and a man - the shopkeeper - who stands behind it. There is a physical and a social barrier and this separation is very disempowering.

This man is someone trusted by her in-laws and is familiar with the family history.

In this case I would call him the shopkeeper-in-law who has a point of view on the purchasing habits. So if this young bahu wants to break out of the mould and try something new, this shopkeeper-in-law would end being intrusive and a social friction with regards to her aspirations.

This is where the self-service stores come into play. It surrounds the woman with choice and takes the man and the counter force out of the way. This luxury of choice is an empowering shift for the young woman out here. Families and people can make their choice depending on what mode of service they require.

In the case of Rita in your book, you have stated that despite wallets not getting any fatter, people seem to show a preference to shop in modern retails over the traditional kirana stores. What do you think has brought about this shift in attitude amongst consumers?The format of a modern retail itself is such that it creates an ambience making everything available in abundance. It provides a comfortable and a well-lit environment, surrounding you with a certain sense of well-being.

Here you can pick up a product, put it in your basket and feel the temporary high of ownership even if it's for a few minutes. For instance I have the power to pick up that expensive looking bottle of shampoo, place it in my trolley and get the feeling that it's solely mine and that nobody else can pick it up despite the fact I have not paid for it.

So this entire experience gives a whole new meaning to empowerment altogether especially to women. Also, over the last two decades, our income levels have gone up significantly and that has upped the purchasing power. Therefore, this way people end up discovering more products and bask in the joy that modern retail.

The story of Sulekha in your book showcases the positive impact modern retail has had in changing lives for the better. Do you think this phenomenon called modern retail has managed to change certain gender stereotypes, which were prevailing in our society?As a supermarket, we tend to touch more lives than what is actually acknowledged. The people whose lives we try and make a difference are basically from modest backgrounds.

If you take the example of Sulekha, her father is a factory worker and her brother drives a public transport for a living. With her educational qualification levels, she would have probably ended up in a meagre clerical role or a packing line job within her catchment area.

Now a supermarket creates that forum, which gives a gender parity and a comfortable environment to work in. It is an organised sector and our employees are trained to be confident and polite while dealing with the affluent customers who frequent our stores.

The values that we inculcate in them is that of integrity and maintaining a firm yet polite conduct. They end up taking these values back home which tends to impact their family members.

We are also working with differently-abled people and providing a similar working environment of this kind. So yes we are working towards making a difference in the lives of such people and changing the gender stereotypes that were dominating our society earlier.

Consumers seem to have shifted to modern retail for their purchases . However, when it comes to certain goods like fruits or vegetables, consumers seem to stick to their traditional habits of purchasing from their roadside vendors. Why do you think modern retail has failed to change this mind-set in particular?I think the mind-sets are changing. In fact the Reliance Fresh stores are known for the consumption of fruits, vegetables and milk by consumers. Over the years you will find that the fruits and vegetables category is the one that stays in the wet market and the preference for street vendors has developed over a long period of time. But things are changing and it is very evident looking at the pattern of the stores that we run in 75 towns of the country.

People are getting concerned over aspects like the kind of water that is being used to keep the vegetables moist. The gradual shift in purchasing fresh foods from modern retail is seen as customers are beginning to trust this organized sector with regards to the hygiene aspect in the perishable goods.

The Indian mind-set still holds the traditional belief of packaged foods of not being fresh or unhealthy despite the modernisation in lifestyles. Now with products like Maggi and Mother Diary, which are under scrutiny, how do you see the market for ready-to-eat and packaged foods in the modern retails and amongst urban consumers?As a supermarketwala, I just ensure that I am a couple of steps ahead of my customer. I sell everything from commodity food to vegetables to the most sophisticated and imported food products in whichever way the consumer wants it. So I don't really take a stance or judgment call on whether packaged food is good or not.

I feel 'ready to eat' meals is completely overrated as a category. While it is growing very well in the consumer market, it's far from becoming mainstream. The concept of 'ready to eat' indicates that the kitchen is outsourcing its work to factories. However it doesn't make sense in a country like India, where the kitchens are normally known to outsource its work to women. Here, a professional cook employed can be trained for making the recipes that cater to the taste buds of the household members.

You have highlighted the 'touch and feel' factor which has made modern retail a great success amongst consumers. However with the advent of ecommerce would customers be ready to compromise on this factor for attributes like convenience and discount pricing which the online stores seem to be banking on?If you take the city of Mumbai for instance, 40 per cent of grocery is bought without visiting the store. Home delivery is done by just placing the order on the phone. So in that aspect one can term it as ecommerce though none of us really call it that way.

Now if you consider the definition of e-commerce, you can state it as 'trusting a service provider to deliver the goods without physically visiting the store'. While the physical kirana stores is being modernized into supermarkets, the kirana home delivery is being modernised as e-commerce. So, from the customer's point of view, there is no dramatic change as such. It's just that the mode of ordering groceries is being modernised in some manner. Therefore in that case I don't see any compromise as such.

The discounts that are being currently offered are just in the initial stages. In two years' time, sustainability will be seen via the long term behaviour of consumers as well as on the part of the service providers.

Many retail chains are seen having profitability issues. How do you see the sustainability of modern retail going forward?Every new sector has its own learning time. People try different models. While some work, some don't. There is consolidation that happens and that's how long term models are built. Retail is in that phase where people are discovering profitability. Everyone has made their share of mistakes. Therefore people are wiser and learning to do business in a profitable manner. In the grocery space, we are chasing a moving target.

If I run the same store for six or seven years, then it shows that my customers have more purchasing power today than when I initially launched the store. The only way we live our increasing incomes is through consumption. We experience the small joys of life of eating out with family or treating ourselves to some shopping and the modern retail stores are where these simple joys get played out.

Lastly after the success of Supermarketwala, do we see any more books from you?I am born to be a grocer. So you will definitely see more stores from me. I am not sure about books. As I had mentioned earlier, Supermarketwala happened by default.

Let's see. May be some other editor someday will tempt me to write another book. Right now I am focused on opening more stores.

Book excerpt from Supermarketwala

Fashion, tastes, preferences are means by which we make a statement about ourselves. The white-collared Sanjay and businessman Rohan live in the same building, have similar income levels and send their children to the same school, but what they seek to say about themselves is very different. A peep into their occupations and the dynamics therein could help us understand this phenomenon better. When Sanjay joined the bank, he entered a well-defined hierarchy that he aspired to climb. He compared designations of his classmates to see where he stood on the corporate ladder.

His desire was to belong, to follow the prevailing norms. Every Sanjay in the white-collared world of banks, multinationals, and large corporate organisations wants to make a statement, he deserves to be there. In dressing and fashion, this is a 'club', and the executive wants to 'belong'. Extend this scenario across the entire white-collared world and you get a class of educated people who follow the same trends-pinstripes, blues and greys, buttoned-down collars, soft colours. It's almost like a uniform, like boys in a premier school. A manager is one who while leading, also wishes to conform. There is a strong need not to 'stand out' lest one be thought a maverick. Also the banker's calling-card says everything about him. He doesn't need his shirt to do so.

Rohan inhabits a different world where he is the boss. Everyone looks up to him. He has to deal with all manner of people, most of the time on their terms. He has no corporate umbrella protecting him from the vagaries of the Indian system. He needs to exude power, confidence, and an unquestioned authority. He doesn't have a large corporate name or fancy designation on his visiting card and so he needs his own statement of power. This he derives from his clothes, accessories, phones, pens, cars and so on-instruments he uses to signal his distinctive taste, influence, and power. He needs to look distinguished and expensive and his individuality has to come through. After all, clothes make the man. He cannot afford to drown his personality in shirts that can be found in every department store. Ideally his shirts have to be custom-made, but in a world of dwindling services, he needs to find outlets for ready mades, where he is convinced that no two shirts look the same. He knows that department stores with their emphasis on subtlety and uniformity cannot offer him this reassurance.

The modern department store has still not recognised this fundamental difference between the self-employed and the white-collared. Many marketers make the crucial mistake of treating both as Section A customers. Most corporate fashion houses are inspired by western fashion trends and 'think' about seasons, cuts, designs, accordingly. This might have to do with the fact that their leaders, designers, buyers, and marketers, are all from the white collared world and hardly mingle with self-employed people professionally or socially. At the other end are the fashion designers who tend to ignore the world of professionals when creating their 'look'. As a result, the two worlds hardly meet sartorially.